A - Z: Real estate terminology
Saving for a deposit is hard. House hunting is hard.
Negotiating isn’t natural for everyone. Then on top of it all is the real estate jargon! And yes, we are guilty of it too. So here is a list of some of the commonly used real estate terminology.
Capital gains tax
Exchange of contracts
Interest only loan
LMI - Lenders mortgage insurance
Mortgage protection insurance
An insurance policy which covers a borrower’s mortgage repayments in the event of illness or injury.
When the earnings (income) (rent) from an investment property are less than the costs associated with the investment. The shortfall can be used to reduce tax liability in Australia, for now.
In a mortgage offset account or home loan offset account, the credit in the account is offset daily against the home loan balance, reducing the interest charged accordingly.
The lowest price a vendor has agreed to accept.
A type of mortgage, usually used by older homeowners, where repayments don’t need to be made until after the property is sold, or the last homeowner dies.
The date on which a property sale is finalised. The purchaser pays the vendor and gains possession of the home at this time. Also the day the purchaser gets the keys to the property.
Tax levied on a contract, calculated as a percentage of the contract value. Varies between states and territories. In NSW Stamp Duty is paid by the purchaser.
The type of property ownership, for example Torrens title, strata title or company title.
A type bank account managed by a real estate where funds (such as deposits and rental income) are held on behalf of someone else.
The annual rental income of an investment property, expressed as a proportion of the property’s value.
An urban planning tool used by local governments to determined how land is to be used. Examples include low density residential, high density residential, mixed use or commercial. Essentially it is what your local council (or NSW Gov) will allow to be built on a piece of land.